Development v/s displacement


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  • For an acre of ‘suna’ or multi-cropping land in Singur the compensation is Rs 12.76 lakh. If we put Rs 12.76 lakh in a fixed deposit we can earn an annual interest of 9 per cent. This gives an annual return of approximately Rs 1.15 lakh or an income of Rs 9,570 per month. One must realise that due to inflation while the real worth of Rs 9,750 will decay over time the nominal income from land will keep on increasing roughly at the rate of average price rise. Adjusting inflation the actual return comes out to be Rs 3000.
  • the Tatas have got a 90-year lease from the government. There is no down payment for the land. For the first five years they will pay Rs one crore a year as rent and the yearly payment will increase by 25 per cent for each five-year interval for the next 25 years. Again for the next 30 years payments will increase by 33 per cent at a five-year interval and for the final 20 years the rent would be Rs 20 crore per year. But this is not the end of the story. The government will give a Rs 200 crore loan to the Tatas at 1 per cent rate of interest and the VAT proceeds accruing from sales of cars will be handed back to the Tatas again as a 1 per cent loan for the first 10 years. On the other hand, by its own admission, the government of West Bengal will be paying Rs 130 crore as compensation to the landowners. The yearly interest on this is at least Rs 13 crore. So there is a straightforward subsidy of Rs 12 crore a year on the purchase of land. Add to this the virtual interest free loan, the tax breaks and the mild five-yearly 25 per cent increase in rent which cannot even cover an inflation of 6 per cent per annum, and it will become clear that the Tatas are getting the land in Singur on a platter, free of cost and garnished on top with additional goodies.
  • Development v/s displacement

    2. 2. INTRODUCTION Firstof all, I would like to specify that “Displacement caused due to Development” is the actual meaning of the topic. Allthe contents in the presentation have been derived from the article of ABHIRUP SARKAR named Development and Displacement.
    3. 3.  The presentation is concerned with the process through which agrarian land is acquired to build up infrastructure, industries and various services, in the process displacing people from their traditional occupations and livelihood. The area of prime focus is West Bengal. Presentation discusses why such acquisition is necessary for industrialization, for the long-run development of West Bengal. It also clarifies how success of industrialization depends crucially upon a well thought out compensation and rehabilitation program, which has so far been seriously lacking in the state
    4. 4.  For detailed understanding this topic first let us understand the basic concepts of -: LAND, DEVELOPMENT and DISPLACEMENT
    5. 5. LAND, DEVELOPMENT AND DISPLACEMENT What is the meaning of development in this article? In 1950s economists defined development as a process of transferring labor from low productivity agriculture to high productivity modern industry (by capital accumulation in the modern sector). The emphasis on physical capital accumulation shifted to human capital accumulation from the mid-1980s.
    6. 6.  However, neither of the two definitions , one emphasising on physical capital and the other emphasising on human capital as the main constraint to development, had visualised that land could also become a serious constraining factor to the process of development.
    7. 7.  Hence,in today’s scenario LAND also acts as a major limiting constraint in development process. A very good example of this fact from recent times is development led displacement in China which gave birth to issues like forced land eviction and land riots.
    8. 8. Hence, for understanding the core issue we need to first have a basic idea of the following -:I. The economic scenario of West Bengal.II. Industrialization and Food Security in West Bengal.III. Land Acquisition and Property RightsIV. Compensation and Rehabilitation
    9. 9. 1. ECONOMIC SCENARIO The first decade of Left Front rule in West Bengal marked significant progress in the agricultural sector. This progress was mainly based on following phenomena:- Series of far-reaching land reforms(“Barga” & “Patta”) introduced by left front. A new method of cultivation using high yielding variety of seeds(known as boro cultivation) was introduced. decentralization of rural power through the three-tier panchayat system.
    10. 10. All this led to prosperity and growth in rural WestBengal.Land reforms, especially tenure security, providedthe farmers the incentive to work harder.Boro technology helped them raise multiple cropswith higher yields.Decentralization of rural power ensured socialstability and security so crucial for growth.As a result, West Bengal emerged as the largest riceproducing state in India contributing more than 15per cent of national production.
    11. 11.  Unfortunately, agricultural growth significantly slowed down in the 1990s.This was due to a number of reasons-:i. frontiers were reached in bringing new land under boro cultivation.ii. Productivity increase could not be achieved either.iii. due to faulty marketing strategies West Bengal failed to export its rice to other states and abroadiv. a rise in input prices, especially that of fertilizers, electricity and diesel. As a result, overall agricultural growth slowed down to a little above 2 per cent in the 1990s.
    12. 12.  West Bengal agriculture has an additional perennial problem of having a very adverse man to land ratio. Population pressure on land started building up in West Bengal from the time of independence. The productivity of West Bengal agriculture is not very low. But if that production is divided by the number of heads dependent on land, the per capita availability is certainly low.
    13. 13. We could summarize that -: There are two major problems of West Bengal agriculture -:i. an extremely adverse land-man ratio andii. the lack of market accessibility of the farmers West Bengal remained just a middle ranking state in the beginning of the 21st century, in spite radical land reforms, the boro revolution and decentralisation of rural power.
    14. 14. 2.INDUSTRIALIZATION AND FOOD SECURITY Both the problems discussed in the previous slide could be partly solved by inviting big capital, including multinationals, into the agricultural sector. Hence corporatization of agriculture has many positives like -:i. providing the farmers certain and wider markets.ii. making them aware about new technology, new productsiii. helping the economy to develop agriculture- based industries.iv. help farmers break their dependence on the feudal traders.
    15. 15.  There is a major problem of corporatization of West Bengal agriculture Rehabilitation of the farmers who will become surplus and jobless once agricultural production is organized efficiently. But quite apart from whether agriculture is corporatized or not, jobs need to be created outside agriculture for the simple reason that the population pressure on land is ever increasing. In other words, there arises the need for industrialization of the state.
    16. 16.  But, industrialization of a state requires development of a pre-requisite infrastructure in order to attract investors. As a result, a large amount of land is required for any large scale industrialization of an state. Hence, for a state like West Bengal (where 63% of land is under agricultural use), the question arises that “Where will this land come from?” The answer to that question is the land which is cultivated must be transferred for industrial purpose.
    17. 17.  At the first look it appears that transferring of land may lead to a possibility of an ensuing threat to food security. But on the contrary the study depicts a completely different picture. The fact is if industrialization is undertaken by proper measure then it will have a positive effect on agriculture in contrast to what we think.
    18. 18.  The following points may suggest that transfer of land is not actually a real cause of worry :-i. West Bengal has about 5,59,12,50,000 ha or about 14 million acres of land under cultivation. Suppose West Bengal requires 1,00,000 acres of land for building up infrastructure, industries and a modern services sector, which will be less than 0.7 per cent of the total agricultural land in the state. It is highly unlikely that if this small amount of land goes away from the agricultural sector, total food grains production of the state is going to be substantially reduced.
    19. 19. ii. Industrialization is likely to have a favorable effect on agricultural productivity and will also increase the labor productivity. With industrialization, as more and more people shift to the industrial and the services sectors, pressure on agricultural land will fall. This will further lead to de-fragmentation of land and hence will make it easier for the framers to use modern techniques of cultivation.
    20. 20. iii. Also the cry of food security is not as justified for a state (which is a part of larger nation) One can perhaps understand that there is some justification for a nation for ensuring food security but for a small geographical region within a country, e g, West Bengal in India, there is no compelling reason why food security is desirable. West Bengal may lag in the agricultural output but may aim to acquire comparative advantage in the industrial sector.
    21. 21.  There is, however, a very serious microeconomic problem associated with land transfer. Acquisition of land entails displacing people from their land and livelihood. Therefore, if the acquisition exercise is not handled properly, social and political unrest will emerge. This will gravely endanger the industrialization process itself. So, we shall presently turn to the problem of land acquisition.
    22. 22. LAND ACQUISITIONS AND PROPERTY RIGHTS There are two alternative ways of acquiring land by the investors -:i. acquire it from the owner by directly negotiating a price with him.ii. the government can acquire the land on behalf of the investor and transfer it to him in exchange for some prearranged price. Though many of the states follow the 1st way whereas in case of West Bengal the 2nd way is preferred.
    23. 23.  In West Bengal the 2nd way was preferred because landholding is much more fragmented (because of land holding and excessive population pressure). Fragmented landholding makes direct purchase of land by the investors both difficult and undesirable. Clearly, when landholding is fragmented, the buyer has to negotiate his purchase with a large number of landowners and this in itself can be extremely costly ( There is also a possibility of speculative hold out by the owners).
    24. 24.  Not only from the buyers point of view, but also from the farmers (which are mostly large and scattered) point of view government intervention is favorable. This is because in such a case, farmers cannot bargain effectively with big industrial houses and only the government can bargain on their behalf looking after their interest. But actually, the West Bengal government under- performed in bargaining for the farmers.
    25. 25.  The government must also keep in mind that Property Rights are not violated during such land acquisitions. In other words, government should avoid secured investor’s property rights coupled with loosely defined property rights of the land owning farmers (which happens most of the times). Hence, violation of property rights and the consequent discontent among the masses can be minimized through proper compensation and rehabilitation package for the displaced. Does the government of West Bengal have a satisfactory compensation and rehabilitation package?
    26. 26. COMPENSATION AND REHABILITATION The government of West Bengal has been using Land Acquisition Act, 1894 to acquire land. The Act empowers the government to acquire any land for a public purpose or for the purpose of use by a company by prior notification and by paying a compensation to the owner. It is a bit strange to find that the act doesn’t mention anything regarding the rehabilitation of the displaced farmers.
    27. 27.  How is compensation calculated? The compensation is based on the current market value of similar land in similar use. A common practice is to look at an average price at which similar land has been transacted over the last few years and then compensating the owners accordingly. Compensation also includes certain types of damages associated with acquisition of land. As there are no proper methods of calculating compensation, there has been a lot of protests by the farmers of the state.
    28. 28.  Some of the causes of under-valuation of land (compensation) are:-i. The prices of the land are always increasing.ii. The market price of land reflects the discounted sum of the expected value of output produced by land in future net of material and labor costs(as the loss of opportunity is not accounted).iii. A small farmer owning a piece of land usually markets a very small part of the produce and keeps the larger part for his self-consumption.o The current practice of evaluating land is on the basis of earnings arising out of its present use.o Even the employment, etc generated will not benefit the farmers as they are not specialized in industrial work
    29. 29.  Over this, there is lack of a proper resettlement and rehabilitation policy, or R&R policy The displaced are offered a menu of cash payment, homestead land, employment opportunities and training apart from the compensation paid for his land as per the Land Acquisition Act. But, no resettlement has so far been planned for the sharecroppers or the landless.
    30. 30.  Till now we have understood the meaning of the topic “Development and Displacement” and the economic and physical issues associated with the topic (mostly in context of West Bengal). Now, we would like to check the credibility and perceptions of the discussion.
    31. 31. RESULTS In West Bengal, chief minister Buddhadeb Bhattacharjee has taken his drive for industrialization rather seriously. The drive for industrialization entailed wooing investors by giving them subsidies, incentives, tax breaks, low-interest loans and easily available land. The Endeavour though had a favorable effect on potential investors and on those who were sympathetic to market-oriented reforms.
    32. 32.  The other part of the endeavor and rather the more important one was related to acquiring land for industrialization. Unfortunately, very little thought, energy and effort went into the planning of this part. Over the last few years, Buddhadeb’s Government has been talking about the improved perception of West Bengal among the investors.
    33. 33.  On the contrary, compensation and rehabilitation questions were largely ignored. In many cases eviction was brute forced upon the croppers. Hence, there emerged incidents like Nandigram and Singur. The Government should realise that the people’s perception about the process of industrialization is more important in a functioning democracy.
    34. 34. CONCLUDING REMARKS In spite of so much protests and policy formulations the puzzle still remains unsolved. Still the basic questions like- “Who are to be compensated?”, “Who is supposed to compensate them?” and “Why are they not being compensated?” still remain unanswered. It seems that the real problem lies with states entering into an unhealthy and inefficient competition between themselves to attract private investments.
    35. 35.  In short, it could be said that the government is very much interested in wooing investors by providing them cheap land at the cost of its farmers (who are drastically affected the fall in their Human Capital) But, still the government is constantly reminded that even if a sizeable minority perceives that industrialization is going to hurt them, then it will be impossible for the government to carry it out. And the incidents like Nandigram and Singur must act as an eye-opener for the policy-makers.
    36. 36. THANK YOU